Using The Media

In yesterday’s post I mentioned seeing something on CNBC which opened the door to a good conversation about how much, if any, stock market television to consume or what role it should play, if any, in participating in the market. Like the portfolio itself there is no single right way to consume information. Personally I want to consume as much as possible. One reader noted that the business model of television is to sell advertising. While that is true, news channels tend to want to report the news as well. There may be, and probably are, biases and conflicts that exist in the running of a network, conflicts and biases from some portion of the reporters and conflicts and biases from some portion of the people being interviewed but if something bad happens to Archduke Ferdinand during the day then chances are it is going to get covered. If, as I said yesterday, you have eight tabs open on your browsers with articles to read and you do not have your TV on a news channel and something big happens then you will not know about it for a while. While knowing that something has happened may not result in a trade some people would want to know right away and some would not care. Which are you? The answer to that question contributes to whether or not your TV is likely to be tuned to a stock market channel. Occasionally the news will trigger a trade and in those instances, timeliness matters. A few May’s ago I woke up one morning, flipped on CNBC and the news of...

Using The Media

In yesterday’s post I mentioned seeing something on CNBC which opened the door to a good conversation about how much, if any, stock market television to consume or what role it should play, if any, in participating in the market. Like the portfolio itself there is no single right way to consume information. Personally I want to consume as much as possible. One reader noted that the business model of television is to sell advertising. While that is true, news channels tend to want to report the news as well. There may be, and probably are, biases and conflicts that exist in the running of a network, conflicts and biases from some portion of the reporters and conflicts and biases from some portion of the people being interviewed but if something bad happens to Archduke Ferdinand during the day then chances are it is going to get covered. If, as I said yesterday, you have eight tabs open on your browsers with articles to read and you do not have your TV on a news channel and something big happens then you will not know about it for a while. While knowing that something has happened may not result in a trade some people would want to know right away and some would not care. Which are you? The answer to that question contributes to whether or not your TV is likely to be tuned to a stock market channel. Occasionally the news will trigger a trade and in those instances, timeliness matters. A few May’s ago I woke up one morning, flipped on CNBC and the news of...

Financial Bulls Will Be Right Eventually

The interweb had a little fun yesterday poking fun at Dick Bove, the sell side bank analyst from Rochedale Securities. It started with his mea culpa of sorts that was picked up by FT Alphaville, was contributed to by his mid-day appearance on Fast Money and was jumped on by various bloggers on Twitter. Bove gets a lot of face time on TV, his opinions get dissected in many places and he has very specific opinions several of which have been wrong in very loud fashion. Later in the day there was another segment on CNBC not involving Bove where an analyst tried to make a bullish argument for financial stocks that with just one ear on the segment seemed to be based on valuations. The valuation argument has been around for a while post-meltdown (Barron’s seems to write this up every three weeks) but hasn’t mattered yet as the sector, as measured by the Financial Sector SPDR (XLF) is still in the dumps. XLF went from $38 before the crisis to a low in March 2009 of $6.18 to a post meltdown high of $17.17 in February of this year and it closed yesterday at $12.12. As a quick recap, I was underweight financials long before the crisis due to the sector’s weight exceeding 20% in the SPX, then went more underweight when the yield curve inverted and have been very underweight and very skeptical ever since. The book value argument is sketchy as I don’t think book value is reliable these days because I do not believe the banks are done writing down the crisis. One observation...

Financial Bulls Will Be Right Eventually

The interweb had a little fun yesterday poking fun at Dick Bove, the sell side bank analyst from Rochedale Securities. It started with his mea culpa of sorts that was picked up by FT Alphaville, was contributed to by his mid-day appearance on Fast Money and was jumped on by various bloggers on Twitter. Bove gets a lot of face time on TV, his opinions get dissected in many places and he has very specific opinions several of which have been wrong in very loud fashion. Later in the day there was another segment on CNBC not involving Bove where an analyst tried to make a bullish argument for financial stocks that with just one ear on the segment seemed to be based on valuations. The valuation argument has been around for a while post-meltdown (Barron’s seems to write this up every three weeks) but hasn’t mattered yet as the sector, as measured by the Financial Sector SPDR (XLF) is still in the dumps. XLF went from $38 before the crisis to a low in March 2009 of $6.18 to a post meltdown high of $17.17 in February of this year and it closed yesterday at $12.12. As a quick recap, I was underweight financials long before the crisis due to the sector’s weight exceeding 20% in the SPX, then went more underweight when the yield curve inverted and have been very underweight and very skeptical ever since. The book value argument is sketchy as I don’t think book value is reliable these days because I do not believe the banks are done writing down the crisis. One observation...

It’s Not an Apocalypse, But In Case It Is…

Yesterday I stumbled across a couple of articles each pointed to how to invest into an economic apocalypse. This is an interesting exercise in terms of how to use volatility in constructing a portfolio. Before jumping into this let me say that economic apocalypse is not my base case. For many years I have thought that this decade will be less growth in the US than people have been accustomed to necessitating more exposure to select foreign markets ex-Western Europe and ex-Japan. One article highlighted five stocks that per the title can survive an apocalypse with the other making a case for going heavy on dividend paying stocks at the expense of bonds. The first article was simply bad (which is why I’m not linking to it) and the second article seemed aver a strategy that I don’t think is right for anyone expecting a “great deleveraging.” To the first article one of the stock picks was a heavy cyclical stock from the industrial sector that I am very fond of although we don’t own the name currently. If we are to take the title literally about surviving then yes the company and its stock will survive but if we have an economic apocalypse then the stock will get crushed and contrary to the author’s assertion, the 2% yield won’t matter. If you really think there will be an apocalypse then you don’t want to own volatile industrial stocks (see below). To the second article it seems like we have had some measure of deleveraging already. If there is more to come (I think the author was implying it...